Sally Loane

Ignition Advice has appointed Sally Loane as its new chair, effective from 5 June 2023.

Ms Loane is an experienced chair, non-executive director, and business leader.  Between 2014 and 2021, she was chief executive officer of the Financial Services Council, the peak industry organisation for financial services, members of which include global and domestic fund managers, retail superannuation funds, advice licensees and life insurers (see full bio below).

Ms Loane succeeds Peter Meurer OAM, the firm’s inaugural chair who is stepping down from the role after serving eight years.  She will work with Mr Meurer and the board during the transition period.

Mr Meurer said he is delighted to welcome Ms Loane as his successor.

“Sally brings proven leadership, including as a chair, and a wealth of industry expertise to the Ignition board from her many years leading a financial services organisation, together with deep knowledge of media and corporate affairs.

“Her experience in policy development and advocacy, specifically in the wealth sector and with a wide range of stakeholders, will be particularly valuable to our business.

“The Ignition team will benefit from Sally’s broad experience over this significant next phase of global growth for the company,” he said.

Ignition co-founder and board director Mark Fordree paid tribute to Mr Meurer and said he has been an integral part of Ignition’s growth over the past few years.

‘Under Peter’s stewardship, Ignition has partnered with a number of leading global financial firms, piloted three capital raises and has been recognised through several global industry awards.

“I thank Peter for his dedication and leadership and wish him all the very best in his future endeavours.

“As we enter the next phase of our growth, we look forward to drawing on Sally’s significant board and industry experience and her aspiration to fulfil our growth ambitions in enabling large financial institutions to dramatically scale their advice propositions to close the advice gap and make advice accessible to all,” Mr Fordree said.

Ms Loane said: “I am looking forward to working with the Ignition board, executive and people at this pivotal time for the digital transformation of the advice industry globally.

“I am a long-time advocate for all Australians to be financially literate and financially independent, particularly women, who retire with less superannuation than men, and who are still subject to a gender pay gap.  Simplified regulation and innovation through digital tools, while maintaining important consumer safeguards, will be crucial to improving affordability and access to financial advice.

“There has never been a more important time for the government and industry to support the transformation of advice provision,” she said.

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Arguably the single most important objective of the Financial Services Royal Commission was to uncover systemic drivers of poor consumer outcomes.

In a continuation of our series on Financial Consumer Protection, this article examines the latest raft of regulatory changes that will impact – directly and indirectly – financial advisers from 2021 onwards. Self-licensed advisers in particular may find themselves surprised about how much work is involved in meeting their new obligations, with the devil – as always – in the detail.

2021 will see new regulations take effect across several key categories:

• Supervision and standards (the dismantling of FASEA)
• Financial advice
• Life insurance
• Superannuation.

To help financial advisers understand these new obligations, and the possible implications for their business models, we’ve compiled this handy chronological ‘Year at a Glance’ summary.

April 5^th: Unfair Contract Terms (UCT) extended to insurance (life and general)

Unfair contract terms

General and Life Insurance contracts have previously been exempted from 2010 legislation banning unfair contract terms (terms deemed to result in a contract being unfairly one-sided) in the standard form contracts seen across most sectors, including energy, telecommunications, and finance.

This exemption has now been removed, in line with Recommendation 4.7 of the Hayne Royal Commission^[1].

From an adviser perspective, the most obvious impact of this change has been the industry wide review and updating of PDSs to reflect new terms. (For example, PDS and Policy documents now contain a lot more detail about the fact that future premium may increase across a product series, and the factors that can drive such an increase).

Despite media reporting of licensee concerns^[2], fears about adverse implications for existing customers have largely proved unfounded.

To the extent that the new requirements offer more equity and protections for individual policyholders (the changes don’t apply to Group Life schemes), it remains to be seen how future court challenges to contract terms play out. The courts will undoubtedly test the assumptions made by insurers when relying on conditions and exclusions, requiring them to analyse their underwriting and claims data to ensure that exclusions and conditions accurately reflect the actual risk exposure.

July 1^st: Annual review of fee arrangements, and independence disclosure requirements

In the context of impact to adviser processes, the most substantive changes for the year take effect from the 1^st of July. New requirements – as summarised in three ASIC instruments^[3] (2021/124 to 2021/126) – apply to:

• the disclosure of lack of independence that an AFSL or authorised representative must give clients where they would breach s923A of the Corporations Act if they used words such as “independence”, “impartial” or “unbiased”
• the written consent that a fee recipient must obtain from a client before deducting, or arranging to deduct, advice fees from a client account as part of an ongoing fee arrangement
• the written consent that a superannuation trustee must obtain from a member before deducting advice fees from a superannuation account under a non-ongoing fee arrangement.

Disclosing lack of independence

Most advisers would be aware of the conditions that prevent them being able to describe themselves as independent^[4] (including the acceptance by themselves or their AFSL of commissions and/or volume related payments, and tightly managed APLs). In that context, the vast majority of advisers will need to comply with requirements to disclose their ‘lack of independence’.

ASIC’s instrument^[5] is – thankfully – reasonably prescriptive in its requirements in this regard, stipulating:

• that a statement about not being independent must be included on the first page of the FSG
• that it must be in a box, and in a bold font
• that it can’t be hidden away, either by using a smaller font size, or in footnotes, or under misleading headings such as ‘Our Independence’
• that it explains the reasons for the adviser’s lack of independence.

More details on the requirements can be found on the ASIC website^[6].

Ongoing fee arrangements

Ongoing fee arrangements (those extending beyond 12 months) were a major area of enquiry during the Royal Commission. Whilst noting no in-principle issues^[7] with the deduction of ongoing fees from client accounts, some concerns were expressed about the transparency of fees deducted from superannuation accounts.

Whilst the ability to deduct advice fees from superannuation was already limited under the Sole Purpose Test, additional requirements now apply.

All ongoing fee arrangements, including those including those commenced prior to 1 July 2013, will need to be renewed by the client annually. In a win of sorts for adviser advocacy groups^[8], a separate renewal notice is no longer required, and instead can be incorporated into a Fee Disclosure Statement.

In addition to information about the services and fees provided (and used) over the prior 12 months, the enhanced FDS must also incorporate a forward estimate over the next 12 months, including the following information^[9]:

• the actual or estimated fees your client will pay over the coming 12 months
• the services to be offered/provided over the next 12 months
• a renewal authorisation (doesn’t need to be a separate document anymore).

Financial advisers must also seek annual agreement from clients for fees to be collected from products (except credit cards and basic banking accounts). The client’s consent to fees will need to be passed on to product providers annually.

New guidelines also apply to anniversary dates and timeframes for issuing FDS documents. As an example, FDSs will also need to incorporate specific information relating to the renewal of the client’s ongoing fee arrangement, including a statement that the arrangement will terminate if it is not renewed in writing within 120 days of the anniversary day.

A transitionary period of 12 months applies, enabling advisers to move grandfathered and bi-annual renewing clients to the new regime.

Deducting advice fees from superannuation

In addition to existing requirements that only fees for advice relating to actual or intended superannuation investments (including account consolidation, fund or product selection and asset allocation within a fund), can be paid from superannuation, tighter requirements now apply around fee disclosure and consents.

Trustees of superannuation funds can only pass on advice fees to members when they are in accordance with an arrangement the member has entered into and consented to, and a copy of that consent has been provided to the trustee. This is true for both choice and MySuper accounts.

Additionally, advice fee deductions from MySuper accounts are now limited to one-off fees.

Advisers should be aware that super funds are likely to vary in their consent processes and should therefore take the time to become familiar with the specific requirements for different funds.

October 1^st: Breach reporting, remediation, reference checking and information sharing, Disability Income

Strengthened breach reporting and remediation obligations

The breach reporting regime for AFSL holders under section 912D of the Corporations Act will be overhauled, with amendments which will:

• expand the kinds of situations that need to be reported by licensees to ASIC
• require licensees to lodge breach reports with ASIC
• require ASIC to publish data about breach reports on its website^[10].

The new legislation is designed to address concerns about the existing breach reporting regime, mainly relating to the test for whether a breach is significant and therefore reportable.

Specific changes include^[11]:

• the introduction of two tests for assessing when a breach is significant, including the “deemed significance test” that deems that a breach of a “core obligation” is taken to be significant if certain circumstances apply
• a requirement for AFSLs to report to ASIC any investigations they undertake
• amended timing obligations for reporting breaches
• the requirement to report serious compliance concerns about advisers of other licensees.

These new requirements have prompted a great deal of industry discussion, with fears that reporting levels may increase exponentially^[12].

The need to report misconduct by advisers at other licensees – and provide that report to both ASIC and the other licensee is particularly fraught, especially in terms of deciding reasonable grounds for making such a report.

This obligation may also present unique challenges for self-licensed ideas who often share ideas and problems with other advisers.

Investigating and remediating misconduct

The new legislation extends an existing framework to ensure that the extent of an adviser’s misconduct is identified in a timely manner and clients are informed and remediated promptly.

The legislation will introduce new obligations on AFS Licensees:

• to investigate reportable situations that may cause loss or damage to retail clients who received personal advice
• to notify those potentially affected clients
• to pay compensation to affected clients within 30 days of completing the investigation.

Reference checking and information sharing

Borne out of Royal Commission Recommendation 2.7, new obligations on licensees will severely curtail the ability of ‘bad apples’ within the advice profession to simply roll from one barrel to the next^[13].

The Royal Commission found that shortcomings in both the way some licensees responded to requests for references, and in the way they treated information they did receive. The new legislation formalises the reference checking process and introduces civil penalties for contraventions of the obligations – either failing to obtain or share information, or not acting on the information.

Questions that employers must answer honestly include whether an adviser has had any involvement in dishonest or unprofessional conduct. Breaches of compliance requirements or the Adviser Code of Ethics must also be disclosed.

Those who share information would be given a “qualified privilege” defence^[14], so they cannot be sued for defamation by any employee who is given an unfavourable reference.

The full scope of the new reference-checking protocols will be made clearer in ASIC regulatory instruments (not released at the time this article was first published).

Individual Disability Income (IDII) changes

APRA’s intervention to improve the sustainability of IDII contracts has already seen the abolition of agreed value contracts. Following industry consultation, APRA has introduced further measures^[15], impacting insurable amounts, replacement ratios and contract terms.

Headline changes include:

• ‘Income at risk’ for policyholders with stable incomes is their income at time of claim and not more than 12 months old
• ‘Income at risk for policyholders with variable incomes will be based on average earnings over a time appropriate to their occupation
• replacement ratios do not exceed 90 per cent of earnings at time of claim for the first six months of the claim and do not exceed 70 per cent of earnings thereafter
• the policy contract is for a term not exceeding five years.

These changes will have major ramifications for all policyholders, especially new ones, and advisers should expect a flurry of new product launches and insurer communication in the lead up to them taking effect.

[Note: Subsequent to this article being published, APRA announced that the implementation of this measure would be delayed 12 months, to October 1^st, 2022.]

October 5^th: Design & Distribution Obligations, Duty of Disclosure abolished, hawking and others

DDO

The essence of the DDO regime is to ensure financial products are targeted at the right people. Its very existence challenges the notion that suitable disclosure leads to informed consumer decision-making.

Products captured under DDO mainly include those that require a PDS or some sort of disclosure to investors.

The design obligations applicable to product issuers include requirements to make a target market determination (TMD) and make it publicly available.

The distribution obligations applicable to distributors (AFSLs and their representatives) include requirements^[16] to:

• not engage in retail product distribution without a TMD
• not engage in retail product distribution where a TMD may no longer be appropriate
• take reasonable steps so that distribution is in accordance with the TMD
• collect, keep and provide distribution information
• notify the issuer of any significant dealings inconsistent with the TMD.

DDO – Practical implications for advisers

Whilst ASIC maintains that a financial adviser should consider the TMD for a product when providing personal advice and meeting their best interests duty, and whilst licensees must take reasonable steps to ensure products are aligned with client segments, RG 274 also notes that financial advisers providing personal advice are not required to meet the reasonable steps obligation under DDO:

“When a distributor provides personal advice, it will not be required to take reasonable steps that will, or are reasonably likely to, result in distribution of a financial product being consistent with the TMD: see s994E (3) and the definition of excluded conduct in s994A (1).” ASIC RG274.200

Potentially the biggest challenge for advisers will lie in the collection of data relating to product usage and customer complaints. This is because distributors are required under DDO to report to issuers:

• Whether it received complaints about the product during a reporting period and if so, the number of complaints received
• Information of the kind specified by the issuer in the TMD that was acquired by the distributor during a reporting period
• Significant dealings in the product that are inconsistent with the TMD.

To minimise the administrative burden – and therefore the cost – to both issuers and distributors, the Financial Services Council (FSC) has worked with a range of industry providers to standardise data collection methodologies and TMD templates.

“Standardisation of information and data is important to the success of the DDO regime. Given the potential for complexity – and associated cost – from hundreds of different templates and data standards, the FSC has developed templates which will assist companies write TMDs for the products they issue.” Sally Loane, CEO, Financial Services Council^[17].

Duty of ‘Reasonable care not to make a misrepresentation’

From 5^th October 2021, applicants for life insurance (and indeed all types of ‘consumer insurance’) will no longer be bound by a Duty of Disclosure. Nor will they face a general prohibition against making a misrepresentation. Instead, an insured entering into a consumer insurance contract will owe a duty ‘to take reasonable care not to make a misrepresentation’.

Often perceived as a catch all ‘get out clause’ relied on by insurers, the Duty of Disclosure was problematic in that it didn’t recognise the gap between what a consumer knows and what an insurer knows is relevant to the decision of the insurer whether – and on what terms – to accept a risk.

The new duty to take reasonable care not to make a misrepresentation places more of a burden on insurers to collect the information they need, rather than requiring applicants to guess what information might be important to an insurer.

Possible implications for the application process

Although a lower burden of responsibility is undoubtedly a better outcome for consumers, it is yet to be seen how this change impacts the application process. The shift in burden could well see personal statements become even longer, as life insurers are forced to be even more prescriptive – and detailed – about the types of information applicants need to provide.

Other changes advisers should be aware of

For the purposes of this article, we have focused on those regulations likely to be most applicable to financial advisers. Other changes coming online throughout 2021 include:

• July 1^st: Registrable Superannuation Entities (RSEs) prohibited from assuming obligations other than as a trustee
• October 5^th: New anti-hawking regime applies to insurance and superannuation, and deferred sales models mandated for ‘add on insurances’.

A word about FASEA

The Government has committed to introduce legislation to support the abolition of FASEA and establishment a new supervisory and standards regime for financial advisers, however at the time this article was originally published, no details about the legislation, including timeframe, were available.

LIF review

The LIF review, which was due to commence in late 2021, has been taken out of the hands of ASIC^[18] and will form part of the late 2022 review into the quality of advice (RC Recommendation 2.3).

Conclusion

Arguably the single most important objective of the Financial Services Royal Commission was to uncover systemic drivers of poor consumer outcomes. Its 76 recommendations are intended to strengthen consumer protections across the sector. Although at the time of publishing less than half the recommendations had been acted on, the massive volume of new financial regulation applying to product providers and advisers is virtually without precedent. With all industry stakeholders at risk of regulatory fatigue, it is vital for all advisers to understand the details of all new regulations, so as to avoid any lurking ‘sting in the tail’. Being across the detail of these new obligations not only helps ensure compliance, but helps advisers understand how their processes are impacted, and how they may need to be adjusted.

Read the previous articles in the series:
CPD: Financial consumer protection – part 1 – practical framework for financial advisers
CPD: Financial consumer protection – part 2 – the art of the conversation (having, recording, storing, using, protecting)

——-

References:
1. https://treasury.gov.au/publication/p2019-fsrc-final-report
2. https://insurancenews.com.au/life-insurance/adviser-group-wants-clarity-from-life-insurers-on-uct-regime
3. https://asic.gov.au/about-asic/news-centre/find-a-media-release/2021-releases/21-058mr-asic-releases-advice-fee-consent-and-lack-of-independence-disclosure-legislative-instruments/
4. https://fpa.com.au/policy/policy-issues/the-use-of-restricted-terms/
5. https://www.legislation.gov.au/Details/F2021L00300
6. https://asic.gov.au/regulatory-resources/financial-services/giving-financial-product-advice/frequently-asked-questions-faqs-advice-fee-consents-and-independence-disclosure/#13-when-do-i-have-to-make-the-lack-of-independence-disclosure
7. Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Final Report, February 2019) vol 1, 162
8. https://www.moneymanagement.com.au/news/financial-planning/govt-delivers-some-simplicity-around-annual-fee-disclosure
9. https://www.moneyandlife.com.au/professionals/focus/new-legislation-on-fee-disclosure-and-renewal-in-financial-advice/
10. https://asic.gov.au/about-asic/news-centre/find-a-media-release/2021-releases/21-080mr-asic-consults-on-draft-guidance-on-breach-reporting-reforms/
11. https://www.ifa.com.au/opinion/29486-under-the-radar-challenges-facing-self-licensed-advisers-in-2021
12. https://www.moneymanagement.com.au/news/financial-planning/how-four-adviser-breaches-could-escalate-198
13. https://www.kitlegal.com.au/2020/12/02/stopping-the-rolling-bad-apples-asic-releases-its-draft-reference-checking-protocol/
14. https://www.smh.com.au/money/planning-and-budgeting/bad-apple-financial-advisers-mortgage-brokers-to-have-fewer-places-to-hide-20201119-p56g7e.html
15. https://www.apra.gov.au/final-individual-disability-income-insurance-sustainability-measures
16. https://asic.gov.au/regulatory-resources/find-a-document/regulatory-guides/rg-274-product-design-and-distribution-obligations/
17. https://www.ifa.com.au/news/29391-fsc-morningstar-roll-out-ddo-solutions
18. https://www.ifa.com.au/news/29466-government-to-combine-lif-advice-reviews

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Sally Loane

The SMSF Association and the Financial Services Council (FSC) are urging the reconstituted National COVID-19 Commission (NCC) Advisory Board and the National Cabinet to expand the role that superannuation funds can play in infrastructure investment as a critical element in generating the economic growth needed to lift Australia out of recession.

The SMSF Association and the FSC represent more than $1.7 trillion of the $2.7 trillion superannuation pool. The two organisations have joined forces to present a common policy front that calls on the NCC to recommend the establishment of unitised, transparent and liquid investment vehicles to house infrastructure assets.

Infrastructure investment vehicles will make them attractive to all superannuation investors and overcome community concerns around illiquidity and asset pricing. In the past, self-managed superannuation funds (SMSFs), in particular, have been largely excluded from this asset class.

SMSF Association CEO John Maroney said: “It has always been a bone of contention with the Association that SMSFs have been largely precluded from investing in infrastructure.

“The benefits of this asset class to SMSFs include managing longevity risks in retirement by offering long-term investment options with low volatility, moderate yield relative to inflation and capital growth, and the desire of trustees to have control via direct investing.

“Infrastructure offers a relatively low-risk investment alternatives to cash and term deposits at a time of record low interest rates.

“So, the opening up of infrastructure investment to SMSFs in a unitised, liquid form would provide a new avenue for SMSF investment that could help fund Australia’s recovery and future infrastructure investment needs.”

Maroney adds that SMSFs have been historically excluded from infrastructure investment because of the high dollar threshold for this investment and the illiquid nature of the asset.

“But the FSC proposal, in addressing the liquidity issue and removing the administrative barriers such as high entry costs, goes a long way to removing the challenges that SMSFs face in accessing an asset class that dovetails their investment profiles with Australia’s economic need for infrastructure development.”

FSC CEO Sally Loane said: “Opening infrastructure investment to SMSFs and superannuation investors would democratise investment in critical domestic infrastructure, as well have the benefit of offering stable, predictable income streams to fund Australians’ retirement.

“Stronger infrastructure investment would allow the National Cabinet and State Governments to turbocharge asset recycling to finance new job-creating infrastructure projects and create jobs.”

The SMSF Association and the FSC also gave their full support to the Prime Minister repositioning the NCC Advisory Board with a focus on creating jobs and stimulating the economy.

Read the FSC’s Accelerating Australia’s Economic Recovery report.
Read the SMSF’s policy position on infrastructure.

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Sally Loane

The life insurance industry has put further steps in place to support Australians through the unprecedented public health and economic impacts of COVID-19.

Last week the Financial Services Council (FSC) announced an initiative on behalf of participating life insurance member companies to ensure that if people lose their job, are stood down or have reduced working hours due to COVID-19, this will not affect their total and permanent disability (TPD) cover.

To align with the current JobKeeper Payment scheme, the initiative runs to 27 September 2020 and claims must be lodged before 1 January 2021.

FSC CEO Sally Loane said this initiative aims to ease any concerns people may have with their TPD cover by preventing any changes to cover being automatically triggered because of COVID-19.

“Millions of working Australians have TPD cover through superannuation which pays out a lump sum if you become totally and permanently disabled because of illness or injury,” Ms Loane said.

“A claim for TPD is assessed on whether the person is expected to be able to work ever again. For this reason, the TPD definition used to assess a claim is based on the person’s recent working arrangements.

“Typically, this depends on the number of hours the person was working and whether they were in casual work before the illness or injury happened. Broadly speaking, the fewer hours you work, the stricter the definition used to assess your TPD claim.

“For most people, changes to TPD definitions happen only after their working arrangements have changed for 6 or 12 months (to cover parental leave, for example). For others, this change can happen after 3 months, depending on the particular policy wording.

“What this means is that some Australians who lost their job, were stood down or had reduced working hours due to COVID, could see their TPD coverage change from 11 June 20201 .

“To address this, today’s announcement ensures that if you make a TPD claim resulting from an illness or injury occurring since the pandemic has started, participating life insurers will assess your claim based on your working arrangements as at 11 March 2020 – the date when COVID-19 was declared a pandemic – meaning you keep the cover you had based on your working arrangements before the COVID pandemic declaration. ^[1]

“This announcement has been timed to ensure the initiative is up and running before anyone is adversely affected,” Ms Loane said.

As at the end of 2018, there were over 7.5 million^[2] Australians with TPD through their group superannuation policy and over 25,000 TPD claims were lodged in 2019.

This initiative follows the FSC Life Insurers commitment to ensure Frontline Healthcare Workers are not prevented from obtaining life insurance cover with participating life insurers purely because of their exposure, or potential exposure, to coronavirus.

Life insurers will confirm their participation by making a statement on their website.

——–

[1] 11 June 2020 is 3 months after WHO declared the coronavirus to be a global pandemic on 11 March 2020.

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Sally Loane

Two of Australia’s peak representative bodies in financial services have combined to create a public education campaign around the upcoming Protecting Your Super changes taking effect on 1 July.

The campaign, titled “When did you last check your super”, was developed by the Association of Superannuation Funds of Australia (ASFA) and the Financial Services Council (FSC), on behalf of Australian superannuation funds and life insurers.

Launched on 7 June, the campaign is running across TV, digital and social, and urges Australians to check their insurance cover through superannuation to understand the impact of the upcoming PYS changes coming into effect on 1 July, and whether they will be affected.

Alongside the campaign, the industry has developed an informative website, www.timetocheck.com.au, to act as a useful resource in educating Australians on how to check whether they’ll be affected.

FSC CEO, Sally Loane stated: “Many Australians only hold life insurance through their superannuation, which provides an important safety net for individuals and their families if the worst should happen.”

“Just weeks away from the commencement of the reforms, fewer than 20 per cent of Australians feel they understand what Protecting Your Super means for their retirement savings.  This campaign urges consumers to keep an eye out for communications from their super fund so they can take action if required.”

“The Protecting Your Super changes will help reduce account erosion through the additional fees and insurance that come along with unintended duplicate accounts. But this is also a timely reminder to check your super and make sure you have the right insurance for your circumstances.”

ASFA CEO, Dr Martin Fahy stated: “We already know Australians are not highly engaged with their superannuation – from the balance to the insurance products they have through their super.”

“This legislation has been introduced for very good reasons, however the timeframe for implementation has meant it’s been challenging for superannuation funds to engage their members with the impact of the changes in just a few short months.”

“Our primary concern is for those Australians who have and need insurance through superannuation, and may not realise they will be impacted by these changes on 1 July, potentially finding themselves without insurance cover when they go to claim as a result.”

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Sally Loane

The Financial Services Council, which represents most of Australia’s life insurers, has launched the inaugural Parliamentary Friends of Insurance Group alongside MLC Life Insurance and AIA Australia.

At a launch event in Canberra on Wednesday 18 October, fitness data for three federal politicians – Senator Deborah O’Neill, Senator Dean Smith and Ms Terri Butler MP – was released to demonstrate how wearables and wellness programs can improve the health of Australians.

Each of the politicians wore a fitness tracker for one month to monitor step count, hours of sleep, heart rate and calories burned.

Their results were as follows:

Sally Loane, Chief Executive Officer at the FSC, said, “The life Insurance industry in Australia has been going through massive reform. It’s terrific to hear how insurers are using the latest technology to help people live longer and healthier lives, over and above providing insurance policies. These initiatives, which are beginning to merge positive health and life insurance outcomes, are very welcome.”

Life insurers are increasingly investing in wellness programs to help improve the health of their customers.

MLC On Track and AIA Vitality are examples of health and wellness programs designed to incentivise and reward customers for physical activity and positive health behaviours.

These programs deliver positive benefits for customers, as well as shared benefits for both government and insurers through lower health costs and lower claims.  It’s a win-win-win and gaining traction across the industry.

Damien Mu, Chief Executive Officer of AIA Australia and New Zealand said, “Most Australians are aware that we could, and should, be taking steps to improve our health. But we overestimate our ability to make healthy choices consistently, and underestimate the long-term harm caused by daily unhealthy decisions. By rewarding healthy behaviour, health and wellness programs are a proactive way for life insurers to make healthy choices the easiest choices and help people live longer, healthier, happier lives.”

David Hackett, Chief Executive Officer at MLC Life Insurance, said, “As the life insurance sector adapts to changing customer needs and the era of big data, it’s vital that insurers use technology to provide more value to customers and support them throughout their lives, rather than simply at the time of making a claim.

“It’s great to be recognised for the work we are doing to improve the health of customers – and for our parliamentary representatives to engage in this push, and support us to support our customers,” said Hackett.

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Mathias Cormann

The Financial Services Council (FSC) is leading a delegation of senior Australian funds management executives to South Korea and Japan this week to promote trade opportunities ahead of the commencement of the Asia Region Funds Passport regime at the start of next year.

Senator the Hon Mathias Cormann, Finance Minister and Deputy Leader of the Government in the Senate, will lead the delegation, which has been arranged with the support of Austrade.

The delegation will meet with funds management leaders in Tokyo and Seoul, as well as with senior officials from local financial services bodies, business councils and sovereign wealth funds to promote Australia as an important financial services trading partner in the region ahead of the commencement of the Asia Region Funds Passport on 1 January 2018.

FSC CEO Sally Loane said: “With the fourth largest pool of managed funds globally and deep expertise derived from managing one of the highest regarded pension systems anywhere in the world, Australian fund managers have much to offer our trading partners in Asia.

“With the right policy settings and the full support of our neighbouring economic partners, financial services, which is already the biggest contributor to the Australian economy, can flourish as the growth engine of the nation.”

The delegation includes representatives from the FSC, Austrade, AMP Capital, Challenger, La Trobe Financial Asset Management, NAB Asset Management, Nikko Asset Management, Regal Funds Management, Aberdeen Asset Management and Yarra Capital Management as well as PwC, KPMG, King & Wood Mallesons and Hall & Wilcox.

It will also be joined by representatives of the Australia-Japan Business Cooperation Committee and Japan-Australia Business Cooperation Committee.

The trade mission to Japan and Korea this week follows a meeting of the Passport Joint Committee in Thailand last week where regulators from participating jurisdictions discussed progress on the Passport.

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Sally Loane

Inquiries into the financial services sector have cost the industry more than $3 billion since the global financial crisis, Sally Loane, chief executive officer of the FSC, told industry executives at a lunch in Melbourne organised by public relations firm Pritchitt Partners yesterday.

“Currently there is the Parliamentary Joint Committee Inquiry into Life Insurance, a three-stage Productivity Commission Review of Superannuation, another into Competition in the Australian financial system, and Labor’s Senate Economics Inquiry into Consumer Protections in Financial Services, all on-going. As well, there’s a taskforce conducting a review of ASIC’s enforcement powers – one in particular looking at industry consumer codes in our sector.

“The FSC is against calls for a Royal Commission.

“Royal commissions are a slow process, only look at past practice and inevitably go off at tangents.

“Any continuing reforms and changes in financial services are always needed quickly to keep up with the fast rate of change in the industry, not least because of technology and the rapidly changing needs and expectations of the community,” Ms Loane said.

Chris Bowen recently outlined Labor’s planned Royal Commission, making it clear that all superannuation funds would be included whilst also adding that they would do a stock take of APRA and ASIC.

Ms Loane questioned why this couldn’t be done with a more simple inquiry, instead of an expensive and time-consuming vehicle like a Royal Commission.

“Our sector has undertaken substantial reform and remediation and our view is that a Royal Commission into financial services is not necessary.

“We believe that the financial services industry as a whole has much to be proud of, having introduced standards and codes in recent years that will help deliver value, build trust in the community, and reduce the cost to Australians of managing financial affairs.

“We are uniquely placed to take up the mantle of consumer reform so that the government can get on with its job of governing. Proving as an industry we can regulate ourselves also strengthens consumer trust in the sector. In this light, we are concerned about a proposal that could act as a handbrake on self-regulation,” she said.

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Sally Loane

Andrea Slattery

The SMSF Association (SMSFA) and Financial Services Council (FSC) were proud to host the Women, Super and Wealth Summit in Sydney last week.

The Summit brought together a range of thought leaders from across government and financial services, placing the spotlight back on the need to ensure that the gender gap in superannuation is closed so that men and women can both have the opportunity for a secure and dignified retirement.

The Summit discussed and debated key issues relating to the causes of the gender gap in superannuation and solutions that can close the gap and improve retirement and wealth outcomes for women. The gender pay gap, further legislative reform, the need to empower girls and women for financial decision making and broader change to workplace and societal attitudes to women’s work emerged as key themes.

Legislative reform

The SMSFA and FSC welcome the Government’s recent changes to the superannuation laws that have increased the flexibility of superannuation, allowing greater opportunities to make contributions to build retirement savings. Although these changes are an important step in the right direction there is still scope for more legislative reform to improve retirement outcomes for women.

A bipartisan approach to advancing legislative solutions should be pursued. Focussing on pursuing the recommendations from the Senate Inquiry into the Economic Security for Women in Retirement should be a priority for the Parliament.

While legislative reform must be a foundation of closing the gender gap in superannuation, the SMSFA and FSC acknowledge that it is only part of the solution and broader workplace and cultural changes are required.

Empowering women and girls

An ongoing need to give girls and women the confidence to make financial decisions and to empower them to take control of their financial future is critical to closing the gender gap in superannuation.

Improving financial literacy of women has been recognised and is still a key to improving their superannuation and wealth outcomes. However, the Summit rightly acknowledged that information and education must nurture girls and women who are empowered and confident in financial decision making to make informed and educated financial choices that will make a real difference to women’s retirement outcomes.

The superannuation and financial services industries have an important role in empowering girls and women in financial decision making, but there is need for the broader community and families to be engaged to ensure that our daughters are given the confidence to take control of their financial futures.

Cultural change

The Summit acknowledged that while legislative change to decrease structural barriers to reducing the gender superannuation gap is needed, broader workplace and cultural change is essential. Cultural changes and strategies inside and outside of the workplace are needed to provide women with greater opportunities to earn equivalent incomes to men and have the same opportunities to save for their retirement.

How our community values the work traditionally undertaken by women – both paid and unpaid – must be revaluated so that industrial segregation and caring for families do not continue to be underlying causes of the gender pay gap that causes the gender gap in superannuation.

Increasingly, encouraging flexible work practices throughout the economy for both men and women is essential to allow greater opportunities for families to find a work-life balance that will allow women to earn and save for retirement.

Leadership is needed

Finally, the SMSFA and FSC call upon the superannuation and financial services industries to lead the wider Australian community in taking steps that will improve the superannuation and wealth outcomes for Australian women and advocating for ongoing change to close the gender gap in superannuation. The superannuation and financial services industries have the knowledge, capacity and opportunities to make a real difference to closing this gap.

The SMSFA and FSC will continue to advocate for ongoing policy change and proactive industry practices and innovation to closing the gender gap in superannuation.

By Andrea Slattery CEO,S MSF Association and Sally Loane, CEO, Financial Services Council

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Andrea Slattery

The SMSF Association and the Financial Services Council (FSC) are joining forces to promote a day-long conference to examine the critical issue of why women retire with superannuation balances substantially lower than men.

The issue will be examined from all angles over eight sessions that will boast some of the best thinkers in the superannuation and wealth management industries in Australia. The latest figures show women retire, on average, with superannuation balances 46.6 per cent below that of men.

The Conference, being sponsored by the Commonwealth Bank, will be held in Sydney on 27 April.

SMSF Association Managing Director /CEO Andrea Slattery says this vitally important issue of women’s lower superannuation balances demands to be addressed, and the Association is delighted to be partnering with the FSC to achieve this end.

Sally Loane

“It’s an issue that has long concerned the Association. We have actively worked to help women better understand their financial circumstances, fully aware of the fact that they often must deal with structural factors, such as broken work patterns caused by parenting responsibilities, that have far less impact on men’s capacity to save for retirement.

“But it’s not just an issue of addressing these structural issues, important as they are. It’s also to get women, especially those starting their working lives, to understand superannuation and wealth-building better than previous generations did.

“When you realise that 47% of the more than one million SMSF trustees are women, then the importance of achieving this goal becomes self-evident.”

FSC CEO Sally Loane says providing women with more information and better advice improves their financial resilience and well-being, and that of their families, businesses and communities.

“This event will outline and demonstrate the critical role we can play to engage and empower women, particularly young women starting their careers, and drive positive change through education, innovation and good business practice.”

Attend the conference.

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